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China’s FTAs around the world and their trade relations

2017/11/30 10:02:18

China is currently
maintaining 12 Free Trade Agreements (FTA) with different trade and investment
partners around the world, not counting special regions like Hong Kong, Macao,
and Taiwan. More agreements are being negotiated at the moment. FTAs are aiming
to increase the import and export relation of countries and regions, removing
tariffs, and improve investment among the participants.

Tranalysis gives
an overview of each FTA and the trade relation of China and its partners. For a
detailed trade analysis by country or product, please contact our team to get
the analysis of import and export value, manufacturers traders, and buyers,
contact information, shipping modes and more.

China
has developed a strategic position when it comes to entering free trade
agreements. Looking at the famous Belt and Road Initiative from Beijing, it is
clear that free trade and mutual investment is one of the key agenda for the
middle kingdom.

Currently,
China has twelve Free Trade Agreements in operation, with another six under
negotiation and another nine under consideration. Several of the current FTAs
are also under upgrade negotiation or at least considered to be upgraded in the
future.

Of
all the free trade agreements involving China, many are relatively small but
useful and important for companies located in them. Countries, which have a
relatively small FTA scope with China are Chile, Costa Rice, Iceland and Peru.

Tranalysis has
listed and summarized all countries or regions that China has currently FTAs
with.

ASEAN

The
FTA between China and the ten member states of the ASEAN association is one of
the most important free trade agreements for China, in terms of trade volume
and value. After all, the free trade area is accounting for the worldwide
largest population in a free trade agreement and for the third largest
agreement in terms of GDP.

The
trade value of all ASEAN members with China is growing constantly, likely to
hit USD1 trillion by the end of the decade. As China is the second largest
economy in the world and ASEAN is accounting for the sixth largest economy, the
trade partnership is boosting import and exports for both regions.

With
the ASEAN bloc including the Asian Tigers of Indonesia, Malaysia, Philippines,
Singapore, Thailand and Vietnam, together with smaller regional players such as
Brunei, Cambodia, Laos and Myanmar, this single agreement is reshaping how
China and ASEAN manufacturing develops.

Without
a doubt, the signing of the China-ASEAN FTA is and will continue to have a huge
impact on China and Asia’s development in global sourcing and the foreign
investment related to this.

Australia

The
FTA between China and Australia is one of the key elements in the stable
development of Asian-Pacific region and promotion of global trade. Since the
Agreement came into effect, China-Australia bilateral economic and trade
relation has enjoyed a steady development. The structure of bilateral trade in
goods has been optimized continuously.

In
fact, China is Australia’s biggest import and export partner currently. On the
other side, Australia is counting for the fifth biggest supplier to China and
the tenth biggest export destination for Chinese products. After all, about
one-fourth of manufactured products imported to Australia are Chinese origin.
The largest export product of Australia to China is thermal coal, a raw
material needed massively in the development of the largest populated nation.

Chile

Under
the free trade Agreement, China and Chile have established a zero-duty
treatment to cover 97 percent of products in a ten-year time period. The two
countries are also strengthening exchange and cooperation in economy, culture,
education, science and technology, as well as environmental protection.

China
is Chile’s largest trading partner, supported by the free trade agreement of
the two countries. After all, in 10 years, the trade volume between the two
countries has almost grown by four times from USD8.1 billion in 2005 to USD31.5
billion in 2015.

While
copper, Chile's main raw material export, represents 79 percent of the
country's exports to China, the middle kingdom is also Chile's second-largest
trade partner for non-copper goods

Costa Rica

Costa
Rica is China 's second largest trading partner in Central America while China
is the second largest trading partner of Costa Rica. In recent years, bilateral
trade between the two countries has grown rapidly, supported by the free trade
agreement. Costa Rica is furthermore becoming one of China’s primary
destinations for investment and trade in Central America.

The
China-Costa Rica FTA features a high degree of openness. Over 90 percent of
goods trade between China and Costa Rica are enjoying zero tariffs on a
stage-by-stage basis. For China, goods under the agreement are from textile
industry, light industry, machinery, electronics, vegetables and fruits,
automobiles, chemicals, as well as hide and leather. Costa Rica is enjoying
benefits for the trade of coffee, beef, pork, pineapple juice, frozen orange
juice, jam, fish powder, minerals and hides.

Georgia

Georgia
was the first country in the Eurasian region, which negotiated an FTA with
China. In terms of the liberalisation level of the agreement, a majority of
trade in goods products of the two sides realized duty-free mutually, made
high-quality market liberalisation commitments to the service departments,
optimized trade rules and clarified the major fields to strengthen cooperation.
The agreement covers trade in goods, service, intellectual property, and rules.
The FTA with Georgia is an important step for China in regards to the Belt and
Road strategy, as Georgia connects European and Asian relations in this transit
region. After all, the Caucasus country aims to become a transit hub of trade
between China and Europe.

According
to the agreement, Georgia eliminates tariffs on 96.5 percent of Chinese
exports, while almost 91 percent of China's imports from Georgia have become
tariff-free. A further 3 percent will be exempted from tariffs within five
years.

Trade
between China and Georgia amounted to USD717 million from January to September
2-16, while Georgia imported goods worth USD547 million from China in the same
period, which is the country's fifth-largest trade partner after Canada,
Turkey, Russia and Ireland, according to Georgia's statistics agency.

Iceland

Iceland
was the first developed European country to recognize China as a full market
economy as well as the first European country to negotiate a free trade
agreement with China. The establishment of China-Iceland Free Trade is
significantly promoting the mutually beneficial cooperation between the two
countries, and facilitate the healthy development of bilateral economic and
trade relations.

New Zealand

Covering
such areas as trade in goods, trade in services and investment, the free trade
agreement with New Zealand was the first comprehensive FTA that China has ever
signed as well as the first FTA that China signed with a developed country. The
two parties agreed to make efforts in launching the upgrading negotiation as
soon as possible with practical attitude, through full consultation and in
pursuit of win-win results.

The
upgrading negotiation will cover many fields including service trade,
competition policy, e-commerce, agricultural cooperation, environment,
technical trade barrier, custom procedure cooperation and trade facilitation,
as well as rule of origin, which will promote China-New Zealand FTA to upgrade
to a higher level trade agreement.

The
close bilateral relation brought the rapid growth of bilateral trade value. The
annual growth rate of bilateral trade was over 15% since 2008. China has become
the largest goods trade partner and the largest export market of New Zealand
for several years in a row, and the largest import source of New Zealand for
the past decade.

Pakistan

China
and Pakistan reached the Free Trade Agreement in November 2006. The Agreement
took effect in July 2007.

However,
in recent times, Pakistan is pushing for a review of its relatively old free
trade accord with Beijing before it moves toward further expansion and
liberalization, amid a burgeoning trade and current account deficit.

China
signed several bilateral and regional FTAs, which limited the benefit of
preferences to Pakistan. China’s FTA with the Association of Southeast Asian
Nations countries has also made the preferential treaty for Pakistan mostly
irrelevant. For example, China charges 3.5% duty on the import of yarn from
Pakistan under the FTA while it also charges the same duty on imports from
India without any treaty.

Peru

The
China-Peru Free Trade Agreement is the first comprehensive FTA China has signed
with a Latin American country. At present, China has become Peru’s largest
trade partner, largest export market and largest import source and Peru has
become China’s fifth largest trade partner in the Latin American region.

The
two countries representatives recently signed an MOU on Upgrading China-Peru
Free Trade Agreement, announcing to launch the joint study on upgrading
bilateral free trade agreement.

China
recently overtook the United States as Peru's top trading partner. Bilateral
trade was worth USD7.1 billion in the first half of 2017.

Singapore

The
China-Singapore FTA came into force on Jan 1, 2009, and was the first
comprehensive bilateral FTA that China has signed with an Asian country.
According to the MTI, China is currently Singapore's third largest trading
partner and the largest investment destination.

The
two countries recorded USd66 billion in two-way trade 2016, representing 13% of
Singapore’s global total. Singapore is also China’s second-largest investor,
with USD6.18 billion invested in the country last year, according to official
Chinese data.

South Korea

The
China-South Korea FTA is a significant event along with the development of
trade and economic relations. It is further expanding the bilateral trade and
two-way investment, improve trade facilitation level, increase the
predictability and transparency of two-way investment, promote the free flow of
goods, capital and personnel between China and South Korea, and create easier,
opener and fairer trade and investment environment.

During
the last 25 years, solid economic links have made China-South Korea relations
one of the most important bilateral relationships in Asia and in the world. In
2015, bilateral trade turnover hit USD227.4 billion.

South
Korea exports to China more than any other nation in the world, its goods
accounting for more than a tenth of the latter’s total imports. China’s share
of South Korea’s total exports exceeds one fourth, twice as high as the share
of the United States. Chinese goods comprise a fifth of South Korean imports,
roughly equaling the share of American and Japanese goods combined. South Korea
is among the top five foreign direct investors in China.

Switzerland

The
agreement is one of the highest-level and most comprehensive FTA China has
signed with foreign countries, besides being the first FTA that China signed
with Continental European countries

Trade
in goods enjoys a high zero-tariff ratio, and favourable mechanisms
for bilateral cooperation in many fields including horologe are established. A
number of new rules on environmental protection and intellectual property
rights are also included. The agreement will further improve China-Switzerland
economic and trade cooperation and deepen China-EU economic and trade
cooperation.

On
January 16, 2017, the representatives of the two countries signed The MoU on
the Upgrading of China-Switzerland FTA, announcing that the joint study on
China-Switzerland FTA upgrading was launched. Switzerland is one of the few
European countries to enjoy a trade surplus with China, and the deal was
China’s first with a continental European nation.